SAP Licensing Compliance and Best Practices

SAP Licensing Compliance and Best Practices

SAP licensing is complex and high-stakes for enterprises. CIOs and CTOs must ensure compliance with SAP’s licensing terms while optimizing license usage to control costs and avoid costly audits.

This article outlines key SAP licensing models, common compliance pitfalls, and best practices to help technology leaders effectively manage SAP licenses.

The Complexity of SAP Licensing

SAP’s licensing model is notoriously complex, featuring a combination of user-based licenses, package metrics, and evolving cloud subscriptions.

Unlike a simple one-size-fits-all license, SAP contracts often include Named User licenses (for each individual user) alongside licenses for specific SAP modules or “engines” measured by metrics (such as database size, number of orders, or CPU cores).

This complexity means compliance isn’t just about counting users – it requires aligning the right type of license to each user and tracking usage against contract metrics.

A CIO might find, for example, that they own dozens of license types across ERP, CRM, and other SAP products, each with fine-print definitions.

Keeping all these details straight is challenging but essential: a misstep (such as using a program beyond its licensed metric or assigning the wrong user license type) can quietly accumulate significant liabilities.

In short, SAP’s licensing landscape demands careful understanding and continuous oversight to ensure every user and system is properly covered.

SAP License Models and Types

SAP offers multiple license models that enterprises must manage. The foundation is typically comprised of Named User licenses, which come in tiers with varying levels of access and cost.

Additionally, there are package or engine licenses tied to SAP software components (for example, licensing the SAP HANA database by memory size or SAP ERP modules by metrics such as annual revenue or number of employees).

SAP also now provides cloud subscription models (such as RISE with SAP or S/4HANA Cloud) where you pay per user or resource on a subscription basis instead of a one-time fee, adding another layer of model complexity.

Read How SAP Licensing Affects Implementation.

Named User License Categories:

Most SAP ERP customers categorize users into tiers, such as Professional, Limited/Functional, and Employee Self-Service, among others. Each category has specific usage rights.

For instance, a Professional user can execute any transaction across SAP modules (and is the most expensive). In contrast, a Limited user might only use certain modules or read data, and an Employee Self-Service (ESS) user can perform basic self-service tasks (with a much lower cost).

Matching each employee to the correct category is crucial for compliance and cost control. An admin or developer will likely require a Professional license, whereas a casual ESS user should not be given an expensive license beyond what is necessary.

Package/Engine Licenses:

In addition to users, SAP licenses certain functionality based on metrics. These might include database size (for SAP HANA), number of SAP Payroll employees, the annual sales processed in SAP, or other business metrics.

For example, if you licensed SAP’s Sales & Distribution module for up to 1 million order line items per year and your business grows beyond that, you could be out of compliance. Unlike user licenses (which operate on trust until an audit), engine metrics can sometimes be technically measured; however, it’s often on the honor system until audited.

Indirect/Digital Access:

A special licensing concern is indirect access, which occurs when third-party applications or external users utilize SAP data without direct authorization. Historically, SAP required a user license for any indirect usage, which caught many companies off guard.

In response, SAP introduced a Digital Access model, where you license the creation of specific documents (such as sales orders and invoices) resulting from third-party systems.

This document-based model can simplify indirect use compliance if adopted, but companies must choose to formalize it.

It’s essential to consider any system (e.g., a customer portal or CRM, such as Salesforce) that reads or writes SAP data, as these interactions may require licenses or a digital access approach.

Typical SAP User License Types and Costs (Illustrative):

Note: Actual prices vary based on volume discounts and enterprise agreements. On-premise licenses usually incur an additional maintenance fee (~20–22% of license cost per year) for support and updates. Cloud subscriptions typically bundle support in the subscription price.

Compliance Risks and Audit Pitfalls

Managing SAP licenses isn’t just a paperwork exercise – there are real financial risks if compliance slips.

SAP reserves the right to audit customers (often annually, though many experience audits every 2-3 years), and an audit can uncover any licensing shortfall.

Common compliance pitfalls that CIOs and CTOs need to watch out for include:

• Indirect Access Surprises: As noted, if external systems or interfaces connect to SAP without proper licensing, it can result in substantial fees. In a well-known case, a global company faced an unexpected bill of over £50 million when courts ruled that its third-party CRM users were indirectly using SAP without licenses. The lesson: every interface into SAP data (from customer web portals to analytics tools) should be reviewed for licensing implications. SAP’s auditors will treat unlicensed indirect usage as a compliance gap, often with steep back-charges.
• Misclassified Users: It’s not enough to have “enough” licenses on paper; each user must have the appropriate type of license. An employee performing extensive transactions with only an ESS or Limited license is technically unlicensed for some of their activities. This is a subtle compliance issue – everything may function day-to-day, but an audit comparing user roles to license types could flag dozens or hundreds of users as under-licensed. The result is a big true-up bill for additional Professional licenses (often at list price). Many CIOs have been caught by this “compliance mirage,” assuming that if the total number of users is equal to or less than the total number of licenses purchased, all is well, only to find that the mix was incorrect.
• Exceeding Licensed Metrics: For engine or package licenses tied to metrics (like processors, database size, or transactions), usage growth can quietly put you out of compliance. For example, if your SAP contract allows up to 500 SAP ERP users or 2 TB of HANA database, and you exceed those limits, you technically need to true-up and purchase more. Unlike user licenses, which have fixed counts, these usage-based licenses can adjust as your business evolves. Without active monitoring, it’s easy to unknowingly surpass a licensed metric until an audit or system measurement reveals it.
• Shelfware and Unused Licenses: Paying for licenses you aren’t using won’t trigger an audit penalty (you’re compliant, just inefficient), but it is a budget killer. Many enterprises have 10-30% more SAP licenses than they need, often due to turnover (when employees leave, their assigned licenses remain unused) or an overestimation of their requirements. The risk here is financial waste: you’re paying annual maintenance on software that isn’t delivering value. Additionally, shelfware can become a negotiation sticking point – SAP won’t refund unused licenses. Still, if you don’t manage them, you might also miss the chance to reallocate or negotiate them into something useful.
• Lack of Documentation: If you can’t show clear records of what licenses you have and how they’re assigned, you’re at a disadvantage during audits or negotiations. SAP will have its records; you need yours to verify or contest any findings. Not knowing your license entitlements and usage is a recipe for accepting whatever compliance bill SAP presents.

The consequences of non-compliance range from forced purchases of additional licenses (often at less-negotiated rates) to back maintenance fees for the period you were out of compliance, or even legal action in extreme cases.

It’s not uncommon for true-up demands from SAP audits to exceed millions of dollars for large enterprises. This is why proactive compliance and internal audits are so crucial.

Read How to Calculate SAP Licensing Costs.

Best Practices for SAP License Management and Compliance

To avoid the pitfalls above and maximize the value of your SAP investments, CIOs and CTOs should establish robust license management practices.

Key best practices include:

• Maintain an Accurate License Inventory: Keep a detailed inventory of all SAP licenses your organization owns, including their allocation. This involves tracking the number of each type of Named User license in use, as well as the status of package and engine licenses, including what they cover (e.g., 1000 ERP users, 8 cores of an SAP application server, etc.). Regularly reconcile this with SAP’s records. Knowing exactly what you’re entitled to is the first step in staying compliant.
• Regularly Audit and Right-Size User Access: Schedule internal license audits (at least annually, and ideally quarterly for large environments). Utilize SAP’s measurement tools, such as USMM (User Measurement Tool) and LAW (License Administration Workbench), to capture actual usage. Identify users who have SAP access but haven’t logged in for months, and users with heavy activity on a lower license type. Right-size your licenses by downgrading or reassigning users to the correct license type based on their role. For example, if analysis shows that many users with Professional licenses only run simple reports, recategorize them to a less expensive license. One company reduced licensing costs by double-digit percentages simply by downgrading infrequent users from Professional to Limited licenses.
• Eliminate Shelfware: Utilize the data from your audits to identify unused or underutilized licenses. If certain modules or user licenses are not being used at all, consider de-allocating them or not renewing their maintenance. While you generally can’t return licenses for a refund, you can stop paying maintenance on unused licenses when the contract allows, or negotiate swaps. Some SAP agreements let you exchange unused licenses for different products or services of equivalent value. At minimum, bringing a list of shelfware to your SAP account rep and requesting to discontinue support on those licenses at renewal can save significant costs.
• Proactively Manage Indirect Usage: Assign responsibility to catalog all third-party integrations with SAP and keep the list updated as new systems come online. For each interface or external application (customer portals, supplier systems, mobile apps, etc.), determine how SAP data is accessed and ensure the usage is covered under your licenses. In some cases, this might mean assigning a “virtual” named user license to cover the interface, or adopting SAP’s Digital Access documents model. It’s far better to address this proactively than to argue about it during an audit. SAP now offers tools and an Indirect Access audit program to help customers measure digital access document counts; take advantage of these to gauge your exposure. By closing any indirect access gaps early (either licensing them properly or technically restricting them), you’ll prevent nasty surprises down the road.
• Utilize Tools for Continuous Monitoring: Consider deploying third-party Software Asset Management (SAM) tools or SAP license management solutions to continuously monitor your environment. These tools can automatically flag anomalies – for example, if a user’s activity suggests they require a higher license type, or if a connected system begins to pull large volumes of SAP data. They can also keep track of user counts and engine metrics against your entitlements. For large SAP landscapes, automation is a significant aid in maintaining compliance on a day-to-day basis. Even with tools, ensure that your IT team is trained to run SAP’s native license reports regularly and accurately interpret the results.
• Governance and Training: Build governance around license management. Assign clear ownership (e.g., a software asset manager or a licensing specialist) for SAP compliance. Incorporate license checks into IT change processes – for instance, whenever a new project wants to integrate a tool with SAP or onboard a batch of new SAP users, have a step to evaluate licensing needs. Additionally, educate your IT staff and procurement teams on the basics of SAP licensing. When everyone is aware that adding a user or spinning up a new SAP module has licensing implications, they are more likely to involve the right approvals and avoid compliance issues. A little training can prevent mistakes, such as assigning all new hires a Professional license by default or deploying a new interface without considering licenses.

Negotiating SAP Contracts and Licenses

Effective license management isn’t only operational – it’s also about strategic negotiation with SAP.

Given the high cost of SAP software, even mid-sized compliance gaps can sometimes be addressed more favorably through negotiation rather than a straight penalty payment.

Here are strategies CIOs and CTOs should leverage when dealing with SAP on contracts and renewals:

• Leverage Data and Don’t Overbuy: SAP sales teams may push additional licenses “just in case” or bundled deals that include products you won’t use immediately. Push back with data – use your internal usage metrics to justify exactly what you need (and no more). For example, if an audit reveals that you’re 50 Professional users short, confirm this with your data and only purchase what’s necessary. Avoid the trap of over-purchasing to appease audit findings; instead, negotiate to get what you need at the best rate, not everything SAP suggests.
• Time Your Negotiations: Like many vendors, SAP has sales targets at quarter-end and year-end. Plan your true-up purchases or new license orders around these periods when possible – you are likely to secure better discounts or concessions when SAP is eager to close deals. Additionally, avoid waiting until the last minute before a contract expires. Start renewal talks early, when you have the flexibility to consider alternatives. If SAP believes you have the time (and willingness) to switch to another solution or delay a purchase, you gain leverage.
• Negotiate Maintenance Terms: Maintenance (annual support fees) is typically 20-22% of the software license price – a significant ongoing cost. The good news is maintenance terms are negotiable. Ensure that the percentage is applied to your discounted license price (not the full list price – SAP’s standard contracts often calculate support on list price unless you negotiate otherwise). Also, seek to cap maintenance fee increases over time. It’s common to ask for a cap, such as a 3% per year maximum increase, or even a couple of years with no increase, especially if you’re committing to a big purchase or a multi-year deal. Some large customers have negotiated a flat maintenance fee for several years as part of a new S/4HANA migration deal, for instance. Every point of maintenance or year of freeze saves a lot in the long run.
• Consolidate and Align Agreements: If you have multiple SAP contracts (perhaps from different business units or acquisitions), try to align their end dates and co-term them into one negotiation event. SAP is more likely to give concessions if they’re negotiating one big renewal rather than many small ones spread out. A unified master agreement also makes it easier to manage compliance and gives you a holistic view of your entitlements. During negotiations, you can propose swapping out unused products for ones you need – for example, trading shelfware licenses for credit toward new licenses or cloud subscriptions.
• Consider Future Needs in Deals: When negotiating, factor your roadmap into the discussion. If you plan to deploy new SAP modules or transition to the cloud within the next year or two, bring that into the discussion. SAP might offer better pricing if it sees a larger strategic partnership. On the other hand, avoid being upsold on future-looking products you’re not committed to using – it’s only a deal if those licenses will actually be utilized. The key is to achieve flexibility: clauses that allow you to adjust license counts or options to swap license types as your needs change (e.g., converting some on-premise licenses to cloud subscriptions later).
• Use Competitive Pressure and Alternatives: As a CIO, you should quietly evaluate alternatives or at least create the impression that you could migrate off SAP or move certain workloads elsewhere. If SAP knows you feel “stuck,” you have less negotiating power. Even if a full switch isn’t feasible, considering third-party support providers or smaller niche solutions for certain functions can pressure SAP to offer better terms to retain your business. For example, the existence of third-party maintenance firms (which charge ~50% of SAP’s maintenance fees) can be a bargaining chip – SAP might throw in an extra discount or service to dissuade you from switching support.
• Document Everything: When you do reach new agreements or get clarifications from SAP representatives (like an email confirming how a particular indirect usage is covered under your license), document and archive it. In future audits or personnel changes, having that paper trail can resolve disputes quickly. During formal negotiations, ensure that any special terms or promises (such as a specific use case being “license-free” or a right to swap users) are written into the contract or an addendum. Verbal assurances don’t count if an audit team comes knocking later.

Planning for Future Changes (S/4HANA, Cloud, and Beyond)

The SAP licensing landscape isn’t static.

CIOs and CTOs must also plan for upcoming changes, such as the transition from legacy SAP ECC systems to SAP S/4HANA and the rise of cloud-based licensing models:

• Migrating to S/4HANA: SAP’s flagship ERP is moving to S/4HANA, and the company has set a 2027 deadline for mainstream support of the older ECC platform. Licensing for S/4HANA can differ from that of ECC, so if you’re planning an upgrade, use it as an opportunity to reset and optimize your licenses. SAP often provides conversion offers or credit for existing licenses when transitioning to S/4HANA. Evaluate those offers critically: in some cases, simplifying to a new contract can close old compliance gaps (since you start fresh), but ensure you’re not inadvertently giving up advantageous terms from your old deal. Best practice: Perform an internal license audit before migrating, clean up any issues (retire unused licenses and fix user classifications), and then only convert what you truly need to S/4HANA licenses.
• RISE with SAP (Cloud Subscription): SAP is heavily promoting its RISE with SAP program, which essentially bundles SAP software, cloud infrastructure, and support into a single subscription contract. RISE changes the licensing model – you typically purchase an overall package based on resources and users, and it often includes indirect access coverage (so the classic indirect use charges are not a worry under RISE). This can simplify compliance because many traditional on-premises license constraints are eliminated in a RISE scenario. However, cloud subscriptions come with their challenges: you’re locked into recurring costs and need to monitor usage so you don’t exceed cloud entitlements (for instance, if your contract is for 1,000 users and you temporarily go to 1,200, you might need to true-up quickly in a cloud setting too). Before committing to RISE or any cloud model, compare the multi-year costs against staying on-premise. Some companies find RISE to be more expensive overall, even if it reduces audit risk. If you do go cloud, negotiate for flexibility (e.g., the ability to scale users up or down annually, and clarity on how future price increases will be handled).
• End of Life and New Products: Monitor SAP’s product roadmap to understand its impact on licensing. For example, if SAP introduces new add-on modules for AI or industry-specific cloud services, they may not be covered under your existing agreements. Conversely, older products might be sunset, potentially giving you leverage to discontinue paying for them. Being aware of these shifts allows you to adjust your license portfolio proactively – perhaps swapping out an older module’s licenses for newer tech that you plan to adopt, within a negotiation. Also, plan for extended support costs if you intend to stay on older versions past their maintenance period – SAP typically charges a premium (e.g., an extra fee or percentage increase) for extended support.
• Continuous Improvement: Finally, recognize that SAP licensing policies can also evolve. SAP occasionally updates its audit programs or licensing rules (for example, clarifying indirect access rules or adjusting user definitions). Make it a habit for your team or your SAP licensing specialist to stay current by reading SAP notes, attending user group meetings, or consulting with experts. Adapting your compliance approach to these changes is part of the long-term game.

By anticipating future changes and baking them into your strategy, you ensure that tomorrow’s new licensing wrinkle won’t undo today’s optimization efforts.

Recommendations

In summary, to achieve SAP licensing compliance and cost optimization, CIOs and CTOs should take the following actions:

• Establish Ongoing License Reviews: Set up a regular cadence (e.g., quarterly) to review SAP user counts, license assignments, and usage. Continuously identify mismatches or unused licenses to take corrective action before audits or renewals.
• Use Data Before Spending: Base any purchase of additional SAP licenses on real usage data and clear business need, not on assumptions or sales pressure. Quantify what you have and what you truly lack, and use that data to negotiate the quantity and type of licenses required.
• Clean Up Before Audits/Renewals: Before an SAP audit or a contract renewal event, conduct an internal cleanup. Remove or reassign inactive users, address any indirect access gaps, and ensure your classifications (user roles to license types) are accurate. This preparation puts you in a stronger negotiating position and reduces compliance exposure.
• Negotiate Proactively and Early: Don’t wait until a contract is about to expire (or an auditor is at the door) to start negotiations with SAP. Engage early, and approach SAP when you have time to explore options. If possible, align negotiations with SAP’s end-of-quarter timing to maximize leverage. Always negotiate for better terms – including discounts and flexible conditions – even on “standard” items like maintenance fees.
• Educate and Involve Stakeholders: Make SAP license compliance a cross-functional responsibility. Educate your IT, procurement, and finance teams on how SAP licensing works and the costs associated with non-compliance. When stakeholders know that every new user or system integration has licensing implications, they’ll be more cautious and communicative. Also involve leadership in major license decisions – for example, getting CFO support to push back on an unfavorable deal.
• Document and Govern License Usage: Maintain meticulous records of your SAP licenses, assignments, and all communications with SAP regarding your entitlements. Maintain documentation of internal audits, and have a governance process for approving changes that affect licenses. This not only helps in day-to-day management but also provides evidence to back your position if there’s a dispute with SAP. Good governance ensures that your optimization efforts remain effective over time.
• Consider Expert Help When Needed: If your organization lacks in-house licensing expertise, consider engaging independent SAP licensing advisors or tools. A small investment in expert analysis can uncover compliance issues or optimization opportunities that save millions. Just be sure that any third-party advice is truly independent – their goal should be to reduce your costs and risks, not sell you more software.

FAQ

Q1: How often does SAP audit its customers, and what can we do to prepare?
A1: SAP typically has the right to audit annually, though in practice, many customers experience audits roughly every 2-3 years. Preparation is key: run SAP’s license measurement tools (USMM and LAW) on your schedule (e.g,. before an expected audit) to identify and fix any discrepancies proactively. Keep clear records of your users, licenses, and usage. By being organized and addressing issues beforehand, an audit from SAP can become a routine check rather than a fire drill. In short, expect that an audit will come sooner or later, and always be “audit-ready” through continuous internal compliance monitoring.

Q2: What exactly is indirect access in SAP licensing, and why is it important?
A2: Indirect access refers to scenarios where people or applications use SAP system data without directly logging into the SAP GUI. For example, if a customer portal or a third-party CRM reads or writes information to your SAP ERP, those external users or actions might still require an SAP license. It’s important because SAP will enforce licensing for this indirect usage – ignoring it can lead to substantial fees in an audit. In the past, companies were caught off guard by multi-million-dollar penalties for indirect use. SAP’s newer Digital Access licensing (document-based licensing for indirect use) was created to offer an official way to license these scenarios. CIOs should carefully review all integrations to ensure they’re properly licensed, either via named users or the digital access model, to avoid unwelcome surprises.

Q3: How can we effectively track and optimize our SAP license usage?
A3: Start with SAP’s tools: run the LAW (License Administration Workbench) report and USMM regularly to get an accurate picture of license consumption. Analyze user login reports to identify inactive accounts or users with low usage – these are potential candidates for license downgrades or removal. Implement a process to promptly reallocate or retire departing employees’ licenses. For large enterprises, consider using a dedicated software asset management tool that monitors SAP usage continuously and flags anomalies (like a user who never logs in, or one who might need a higher license based on activity). Periodic internal license audits (with involvement from IT and asset management teams) will help catch issues early. Optimization is an ongoing effort: as roles and systems change, keep adjusting license assignments to match actual needs.

Q4: We have many unused SAP licenses. Can we reduce our costs on those?
A4: You generally cannot “return” surplus licenses to SAP for a refund, but you can take steps to stop the bleeding on unused licenses. First, identify which licenses (users or modules) are truly unused or inactive. At your next renewal or true-up negotiation, ask SAP for relief. For instance, you can request to terminate maintenance on unused licenses, thereby avoiding support payments for them. Another option is to negotiate swapping unused licenses for other software or services that you do need – SAP may be open to applying the value of shelfware licenses toward new products (or toward a cloud subscription, such as RISE). At a minimum, ensure you’re not purchasing additional licenses if you already have idle capacity; instead, redeploy what you have. The key is raising the issue during negotiations – SAP won’t volunteer to reduce your licenses or fees, but they may be more accommodating if you bring it up as a condition of a new deal.

Q5: Are SAP’s maintenance fees negotiable, or is the 22% annual fee set in stone?
A5: Maintenance fees are negotiable to an extent. SAP’s standard support is typically 22% of the license net price annually (for Enterprise Support); however, savvy customers ensure that the “net price” is based on the discounted purchase price, not the full list price. You can also try to negotiate the percentage down or negotiate credits. A common best practice is to negotiate a cap on annual maintenance increases – for example, no more than a 3% increase per year, or even a couple of years locked with 0% increase. Large customers making significant purchases have successfully secured terms, such as a fixed maintenance fee for 2-3 years. Always remember: while you will likely pay maintenance as long as you use SAP, you have leverage over how it’s calculated and how quickly it can grow. It never hurts to ask for a better deal on support costs as part of a larger negotiation.

Q6: What is the difference between Professional, Limited, and Employee Self-Service user licenses in SAP?
A6: These designations reflect the scope of system access a user has. A Professional User license is the highest level, allowing full use of SAP modules and transactions – suitable for power users, administrators, and anyone who needs broad capabilities (it’s also the most expensive type). A Limited Professional (sometimes referred to as a Functional) user license costs less and restricts the user to specific functional areas or a limited range of activities. For example, someone in procurement might only use SAP MM (Materials Management) functions and not have access to the finance or sales modules. Employee Self-Service (ESS) licenses are for casual users who perform basic tasks, such as entering their timesheets, viewing travel expenses, or accessing their HR information. ESS users usually cannot execute core transactions beyond those self-service actions. In practice, you want to assign each person the lowest level license that meets their job needs – use Professional licenses only for those who truly require full access, as it’s not cost-effective to provide every user with a Professional license if a Limited or ESS license adequately meets their requirements.

Q7: What should we do if SAP informs us that we’re out of compliance on licenses?
A7: Don’t panic – and don’t immediately agree to whatever is put in front of you. If SAP (through an audit report or sales inquiry) says you are out of compliance, first request detailed information: Which licenses are short? What usage was observed beyond entitlements? Sometimes, the findings can be based on misunderstandings or data issues that can be clarified. If the shortfall is real, explore your options to address it. Often, the resolution will be to purchase additional licenses or to adjust to a different licensing model. Negotiate the resolution rather than just paying a “penalty” invoice. For example, if you truly need 100 more licenses, you could negotiate a deal to buy those 100 as a new purchase (possibly at a volume-discounted rate or bundled with an upgrade) instead of paying the list price for maintenance on them. SAP generally prefers selling you something new (even at a discount) over punitive fees. Engage your procurement and maybe legal team – treat it as a contract negotiation. And importantly, learn from it: address the internal lapse that led to the non-compliance so it doesn’t recur.

Q8: Are there tools or services to help optimize SAP licensing and compliance?
A8: Yes, several third-party tools and services specialize in SAP license management. Tools from vendors like Snow Software, Flexera, or Voquz (to name a few) can integrate with SAP and provide analysis of user activity, identify mismatches in license assignments, and simulate audit results. SAP itself provides some tools (besides LAW/USMM) – for instance, SAP License Management by VOQUZ or SAP’s Solution Manager’s License Optimization functions. There are also consulting firms and SAP license specialists who can perform an independent license review or audit defense. These experts can often uncover hidden compliance issues or identify ways to optimize your license portfolio (for example, by determining that 20% of your Professional users could be downgraded). While these services cost money, they can easily pay for themselves if you have a large SAP spend, by preventing a big audit finding or by trimming unnecessary licenses. Just ensure any tool or consultant operates with read-only access to your SAP data and maintains confidentiality, as your usage information is sensitive.

Q9: When is the best time to negotiate with SAP for better terms or additional licenses?
A9: The best time is before you urgently need them. In other words, plan ahead and engage SAP well in advance of any critical deadline. SAP account executives have quarterly and annual targets, so the end of Q4 (around December) and the end of Q2 (June) are often when they’re most eager to close deals, which can translate into bigger discounts for you. Additionally, if you anticipate needing more licenses in six months due to a project, begin discussing this now rather than one month before your go-live date. Another strategic moment is if you’re about to embark on something significant, like an S/4HANA upgrade or a competitive evaluation – SAP will be keen to lock in your commitment and may offer concessions. Essentially, your leverage is highest when SAP believes you have choices and time. So use that: shop around, let them know you are considering all options, and align your big asks with their sales calendar for maximum effect.

Q10: Should we consider moving to RISE with SAP or other cloud offerings, and how do those affect licensing?
A10: RISE with SAP is worth considering as part of your long-term strategy, but weigh the pros and cons. RISE turns your licensing into a subscription service – you essentially rent the software (and the infrastructure to run it) for a recurring fee. The upside is simplicity: you don’t have to worry about indirect access charges (SAP includes these in the subscription), and SAP handles a lot of the technical management. Compliance in the traditional sense (counting users and engines) changes because under RISE, you’ll have a contract for a certain number of users and resources, and you’ll pay more if you go beyond those, just like any cloud service. It can help reduce classic audit issues, but you’ll need to closely monitor cloud usage to stay in line with your contract. The cost of RISE can be higher than a well-negotiated on-premise deal over the years, so assess it financially. Suppose flexibility and offloading infrastructure are your top priorities. In that case, RISE might be an attractive option – just be sure to negotiate the terms (for example, what happens if you need to increase or decrease users, how annual price increases are handled, and exit options, etc.). In short, cloud options change the nature of compliance (less about surprise audits, more about subscription terms). Still, they don’t eliminate the need for license management – it just shifts to managing your cloud subscriptions wisely.

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